Gold rose as US Dollar fell and interest rate expectations limited gains

Gold prices rose on Thursday, supported by a slight decline in the dollar, but the odds that interest rates in the United States will remain high for a longer period limit the gains of the yellow metal.

Gold in instant transactions rose 0.3 percent to $ 1830.90 an ounce by 0708 GMT. US gold futures fell 0.1% to $1,839.60 an ounce.

High interest rates make gold less attractive as a hedge against inflation, as they increase the opportunity cost for holders of the non-yielding metal.

On Wednesday, the minutes of the Federal Reserve’s last policy meeting showed that policy makers agreed that there was a need to raise interest rates more, but shifting to lower rates would allow them to move step by step according to the data received.

Moreover, a raft of data released in the past few weeks has shown the strength of the US economy, adding to concerns that the Federal Reserve will remain on its tightening path.

James Bullard, President of the Federal Reserve Bank of St. Louis, confirmed on Wednesday that the bank’s policy of raising interest rates in a range between 5.25 percent and 5.5 percent would be enough to curb inflation. Dealers in Fed futures expect interest rates to peak at 5.362 percent in July and remain above 5 percent for the year.

Investors’ attention is now focused on personal spending data for US consumers due to be released on Friday.

The dollar index fell 0.2 percent, making gold cheaper for holders of other currencies. US Treasury yields fell for ten years from Wednesday’s highest level in three months.

In terms of other precious metals, spot silver rose 0.5 percent to $21.61 an ounce. Platinum jumped 0.5 percent to $953.13. Palladium fell 0.6 percent to $1,472.72.